Introducing Blockchain is like a conference moderator introducing the famous speaker who needs no introduction. If you Google “Blockchain for dummies”, you get a choice of explanations. We assume that the Daily Fintech community is beyond that point. If you need to understand the fundamentals the Khan Academy has a good video tutorial. Like our earlier AI Week, this theme week will focus on real world use cases rather than explaining the underlying technology.
The Economist Trust Machine
The topic of Blockchain without Bitcoin got my attention in July 2014 when Ethereum did their crowdsale. During 2015 Blockchain got a lot of media attention. In September 2015, the World Economic Forum chose it as one of 6 Megatrends and forecasted 10% of global GDP will be stored on Blockchain by 2025. This culminated in the October 31st 2015 cover of the Economist which brought an esoteric tech subject into the spotlight. At about that time, I was at SIBOS in Singapore and a session about Blockchain was massively oversubscribed. By March 2016, The Economist was declaring that Hype Springs Eternal, signalling the end of the hype and an attempt to bring some realism to the subject.
Daily Fintech believes that the hype cycle and the reality cycle are disconnected. Something can be massively hyped and still change the world. That is why during Blockchain Week we focus on real world use cases.
Don Tapscott Book on Blockchain
I learned that even when something is massively hyped and seems rather strange at first sight, that it can still be very real and change the world when I read Wikinomics (How Mass Collaboration Changes Everything) by Don Tapscott in 2006. This convinced me that social media was a real force for disruption, despite the hype. So it is significant that Don Tapscott has a new book called Blockchain (How the Technology Behind Bitcoin is Changing Money, Business, and the World). My review copy did not get here in time to write this post, but based on his Wikinomics book I intend to read his Blockchain book thoroughly.
It is a natural follow on book for Don Tapscott. His Wikinomics subtitle was How Mass Collaboration Changes Everything. One enabler for Mass Collaboration is a decentralised, trust-less value exchange. Voila, Blockchain arrives a decade later.
The aforementioned WEF report puts the tipping point out as far as 2027. The oft used analogy is that Blockchain is like Internet c 1995, which would make it a tipping point over 10 years away.
That 10 years matters because VC needs to give liquidity back to LPs within 10 years.
Between 1995 and 2005 we had the technology nuclear winter when most tech investments evaporated. A few made it mega big. The same will be true in this gold rush.
The Simple Question – when should we use Blockchain?
Blockchain will not give you a perfect body that makes you attractive to the opposite sex. However it does have some real uses. Senior executives, entrepreneurs and investors (our readers) need to make decisions about Blockchain without having the time, experience or inclination to get down into the technical weeds.
Daily Fintech has a simple question to determine whether Blockchain could be useful in a project. Do you need a trust-less shared ledger based on an immutable database? Let me unpick that:
- Trust-less means that you do not need to trust any of the participants in a network. In enterprise projects for example, this applies to inter-company transactions. Transactions within a single company can use traditional distributed databases because the company can enforce that a record is not changed for a nefarious purpose. Blockchain is a lousy distributed database (slow and expensive) unless your system has to be trust-less.
- Shared Ledger. Business people understand ledgers. Traditional IT people also understand the hassle of reconciling entries in multiple ledgers in different companies every time there is a transaction. That simple sentence describes a multi-billion $ global market of back office and trade processing. A shared ledger – a single version of the truth – is a disruptive concept.
- Immutable. This means that nobody can change a record, they can only append a new record. This is why it can be trust-less. Participants have total confidence that the record has not been tampered with. That trust is not based on trusting a company or government institution.
Lots of esoteric debates for those who live and breath Blockchain
At Blockchain events,meetings and forums, one hears heated debate about Bitcoin vs Altcoins, permissioned vs permissionless, Proof of Stake vs Proof of Work. These do matter and we do occasionally cover them on Daily Fintech, but usually our focus is on the business use case layer.
Calendar for Blockchain Week
- Tuesday will focus on Securities issuance, decentralised marketplaces and early attempts in provenance and compliance in financial securities
What do you think?
The Daily Fintech Community is smart. We want to know what you think. Please take a few seconds on our (annonymous) multiple choice question:
A. Blockchain is hype and nothing significant will come from it.
B. Blockchain will change the world